President Uhuru Kenyatta took advantage of Mashujaa Day celebrations on Wednesday, October 20, 2021, to announce a raft of economic measures and interventions his government seeks to make to reinvigorate the economy which is reeling from effects of the Covid-19 pandemic.
President Kenyatta announced a new stimulus programme with 13 strategic interventions that will be effective on November 1, 2021. The Stimulus Programme targets key productive and service sectors in agriculture, health, education, drought response, policy, infrastructure, financial inclusion, energy, environmental conservation.
- Tea sub-sector: The National Treasury was directed to allocate KSh. 1 billion in support of a fertilizer subsidy for tea farmers.
- Sugar sub-sector:The sugar sub-sector will be allocated KSh. 1.5 billion by the National Treasury as directed by the President. The money will be appropriated towards factories’ maintenance and payment of farmers’ arrears.
- Coffee sub-sector: The National Treasury was directed to allocate KSh. 1 billion to the Ministry of Agriculture to be appropriated towards completion of the ongoing targeted interventions in the Coffee sub-sector.
- Livestock sector:Due to the effects of the ongoing drought, the National Treasury was directed to allocate KSh. 1.5 billion in support of communities affected by the drought in the ASAL counties as part of the government’s National Livestock Offtake Programme.
- Livestock sector: Animal FeedsTo secure a reduction in the prices of animal feeds, the President ordered the Cabinet Secretary for Agriculture, jointly with the National Treasury, to issue within 7 days, a framework that will facilitate the reduction of the cost of animal and chicken feeds.
- Education Sector:Noting the success of the policy on 100% transition from primary to secondary education,the President directed the National Treasury to allocate KSh. 8 billion to the Ministry of Education for the CBC Infrastructure Expansion Programme.
- Health Sector: To enhance access to medical coverage across the country, and as part of the Universal Health Coverage programme, the President directed the Ministry of Health to establish an additional 50 new Level 3 hospitals, to be situated in non-covered areas and densely populated areas across the country. He also directed the National Treasury to allocate KSh. 3.2 billion for immediate construction of the medical facilities.
- The National Sanitation Programme:Noting the success of the Kazi Mtaani Programme and its effect on enhancing opportunities for the youth across the country, the President directed the National Treasury to allocate KSh. 10 billion for the third phase of the Kazi Mtaani Programme. The programme covering over 200,000 youth will be rolled out in all counties, with priority given to densely populated areas. The Head of State said that the measures will inject an additional KSh. 25 billion into the economy and that they will complement the ongoing State interventions that are expected to sustain the momentum of recovery, with the year’s growth rate projected to be 6%.
- Energy and petroleum Sector:President Kenyatta directed that:
- The Ministry of Petroleum & Mining, jointly with the National Treasury, to develop by December 24, 2021, a framework for stabilisation of petroleum prices, so as to cushion Kenyans against the turbulence caused by the volatility in fuel prices; and
- The Ministry of Energy to secure the full implementation of the Report of the Presidential Taskforce on Review of Power Purchase Agreements, that establishes a pathway for the reduction of electricity prices by 30 % by December 24, 2021, as the President looks forward to Kenyans being relieved of the burden of high tariffs by Christmas Day.
- Banking Sector:The President stated that the implementation of the Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) framework by banks has been onerous for Micro, Small and Medium Enterprises(MSMEs). Cash still remains an important payment channel for MSMEs, representing 80% of all their financial transactions. He ordered the National Treasury, after consultations with other stakeholders, to immediately cause the upward revision of the cash transactions reporting threshold from the current mark of KSh. 1 million applicable to both withdrawals and deposits by customers. The financial institutions will retain their reporting obligations to the Financial Reporting Centre.
- Access to Credit:One of the Covid-19 emergency measures was the suspension of negative listing of loan defaulters with Credit Reference Bureaus (CRBs). This suspension lasted for six months, from April to September 2020, and provided relief particularly to MSMEs during the pandemic period. Since some MSMEs continue to struggle to get back to a sound footing following the adverse effects of the pandemic, the President ordered the National Treasury, in consultation with all stakeholders to secure the following measures to provide further space for the recovery of MSMEs:
- The relevant authorities will, for loans less than KSh. 5 million, effect a moratorium of listing in CRBs for a period of 12 months to end September 2022; and
- Borrowers with loans below KSh. 5 million listed with CRBs from October 2020 to date will not have that listing incorporated in their credit reports for the next 12 months, ending September 2022. The President also urged all banks and financial institutions to accommodate customers who seek to restructure their banking facilities.
- Digital financial services:The President directed the National Treasury to engage all digital payment providers with an aim of deepening and expanding the use of digital payment channels.
- Vaccine production:In the spirit of self-reliance, the President announced that the government has established a company to facilitate this venture in the name of Kenya Biovax Limited. The Ministry of Health was directed to operationalize the company to manufacture vaccines by Easter of 2022.
Out of the 13 stimulus packages, only four need policy reforms to come to life. The rest only need the National Treasury to release funds.
Livestock sector: Animal Feeds
On Tuesday, the Speaker of the National Assembly reported to the House that he had received a Petition signed by five representatives of livestock producers and animal feed manufacturers on behalf of the Broiler World Co-operative Society Limited, the Association of Kenya Animal Feed Manufacturers, Kiambu Poultry Co-operative Society, Pig Producers and Githunguri Co-operative Society Limited, among other stakeholders. The Petitioners raised concerns regarding what they describe as unprecedented rise in prices of animal feeds in the country. They claim that the increase has been occasioned by policy gaps that have resulted in low production of plant-based animal feed components extracted from soya beans, sunflower and cotton, among others in the country.
This petition, plus the Presidential directive, will lead to the National Assembly Departmental Committee on Agriculture and Livestock and the Ministry of Agriculture working together to find out the root cause of high cost of animal feeds.
Energy and Petroleum Sector
The National Assembly has been working on reducing fuel prices through the Petroleum Products (Taxes and Levies) (Amendment) Bill, 2021. The aim of the bill is to review taxes and levies on petroleum products. This move may be complemented by the actions that will follow the President’s order that a framework for stabilisation of petroleum prices be developed.
There is a Proceeds of Crime and Anti-Money Laundering (Amendment) Bill, 2021 in the National Assembly, but the Bill does not propose the raising of the amount limit. The Presidential’s directive may lead to more amendments being added to this bill.
Access to Credit
The directive on the suspension of negative listing of loan defaulters with Credit Reference Bureaus (CRBs) was last year implemented following a circular from the Central Bank of Kenya and the regulator will definitely release a circular on this soon. In the same breath, we should expect further consultations between the National Treasury and the digital payment providers on how to expand the use of digital payment channels in Kenya. The Central Bank of Kenya Amendment Bill was read the third time this week and it will be interesting to see the direction of the engagements.